Case name: Google LLC v. DRS Logistics (P) LTD. and Ors.

Citation: 2023 SCC OnLine Del 4809 [FAO(OS) (COMM) 2/2022]

Court: High Court of Delhi (Division Bench)

Coram/Judges: Hon’ble Mr. Justice Vibhu Bakhru and Hon’ble Mr. Justice Amit Mahajan

Abstract

This case commentary examines the high-profile decision of the Division Bench of the Delhi High Court, which has resolved a prolonged (ten-year) dilemma regarding trademark law and its interaction with digital advertising. The major issue in dispute was whether or not a competitor’s use of a trademark in connection with their Google Ads program can be considered “use” as contemplated by the Trademark Act, 1999 and whether or not it constitutes infringement under the same legislation; the Court determined that purchasing another company’s trademark in connection with Google Ads does constitute “use” as defined by section 29(6) of the Trade Marks Act, 1999. In addition, the Court has found that Google may not avail itself of “safe harbour” protections under section 79 of the Information Technology Act, 2000, for its keyword suggestion service because Google is actively profiting from, and facilitating, the keyword suggestions made with these tools. The ruling sets forth a new paradigm for the invisible trademark infringement in the Indian digital market. 

Keywords: Trade Marks Act, 1999; Keyword Advertising; Intermediary Liability; Section 29 (Infringement); Section 79 (IT Act); Google Ads; Passing Off.

Introduction

Globalisation of the Digital Economy has created many changes in the way Courts define property and infringement in their respective jurisdictions. The way Courts defined infringement (and the way they still usually do) before the Globalization of the Digital Economy was based on visual or physical indications, such as packaging/labels/logo similarities. The Globalization of the digital economy has created the concept of “Invisible Use” of Trademarks in the backend (metadata or algorithms) of search engines to attract consumer attention away from the infringer.

The decision in this case is important because it deals with the operations of the Google Ads Program. This case examines the practices of other companies during their bidding process, using a trademark of another person/company as “Keywords” when they want to trigger their ads. Companies, which often justify this type of conduct by claiming it is “fair competition”, are trying to take advantage of or exploit the goodwill developed and/or built up over time by established brands. The Delhi High Court’s ruling in this case is a major step in bringing Indian Intellectual Property Jurisprudence into line with SEM, as well as trying to find the right balance between the right of Trademark owners and the right to fair competition.

Facts

The conflict was a consequence of Google LLC (the Appellant) and DRS Logistics (the Respondent), who are both proprietors of the trademark “Agarwal Packers and Movers,” and the dispute pertains to the trademark.

1. Business Model: Google runs an advertising program called “Google Ads” where advertisers are able to bid for specific “keywords.” Whenever a user searches for any of the keywords in question, the corresponding advertisement from the specified advertiser appears in the “Sponsored” section of the search page.
2. Allegation: DRS Logistics noticed that whenever a user searched for “Agarwal Packers and Movers,” there were multiple advertisements displayed for third-party (or competitor) packing and moving companies.
3. Mechanism: The competitors were able to bid for the trademark “Agarwal Packers and Movers” as a keyword for their advertisement. In fact, Google’s tool for suggesting keywords (known as the “Keyword Planner” tool) was actively recommending the trademark “Agarwal Packers and Movers” to competitors as a keyword to bid on due to its high volume of daily usage.
4. Suit: DRS Logistics sued Google, stating that this incident constituted trademark infringement and also passing off. They also stated that Google is liable for permitting and encouraging this practice.
5. Procedural History: A single judge (Justice Sharma) sitting in the Delhi High Court previously ruled in favour of DRS Logistics, ordering Google to conduct an investigation and to remove the aforementioned advertisements. Google appealed against the decision of Justice Sharma to the Division Bench, claiming that it merely operated as an intermediary and did not engage in advertising or promotion. Furthermore, Google contended that even though advertisers can use invisible keywords in their advertisements associated with their businesses, Google did not endorse such usage.

Issues

The Division Bench had to consider three important legal issues:

• The meaning of “use” of a trademark: whether the use of a registered trademark as a “keyword” by an advertiser (which is invisible to the user) constitutes “use” under sections 2(2)(b) and 29(6) of the Trade Marks Act 1999;
• The test is whether such use constitutes an infringement of a registered trademark within the meaning of section 29, or whether it is necessary to establish consumer confusion to constitute an infringement; and
• Whether Google can take advantage of the safe harbour provision of section 79 of the Information Technology Act 2000, notwithstanding the active selling of trademarks as keywords.

Reasoning

The judgment of the Division Bench was comprehensive and confirmed the rejection of all of Google’s main arguments and provided clarity as to what constitutes an infringement.

1. “Use” of Trademark (Section 29(6))

Google contended that the keyword was not visible to consumers as it existed in the background, so it could not be legally classified as “use.” The Court disagreed, finding that Section 29(6) of the Trade Marks Act specifically includes use of the trademark in advertising. The Judges explained that when an advertiser selects a keyword to trigger advertisements, they have selected the keyword specifically to target customers and link to the advertisements being displayed. Therefore, the lack of visibility of the trademark to consumers does not change the fact that the advertiser is utilising the value of the trademark in targeting its customers.

2. On Infringement [Section 29(2) vs. 29(1)]

The Court distinguished between “Using” and “Infringement.”

• Not Automatic Infringement: Bidding on the trademark does not automatically create the reason for finding that an infringement exists; a finding of actual infringement requires a finding under s.29(2) that there is a likelihood of confusion.
• “Confusion” The Test: If the advertisement (the text displayed to the user) identifies the competing party in a manner in which the user does not recognise it to be an advertisement or website owned by the trademark owner, then there is no infringement. Conversely, if the advertisement is deceptive or misleads the user to believe it is affiliated with the trademark owner, then it is an infringement.
• Dilution [Section 29(4)]: The Court observed that even absent confusion, where there is unfair advantage taken from the sign of the trademark and its distinctive features, it could establish infringement; this will depend on individual circumstances.

3. On Safe Harbour (Section 79, IT Act)

The Court concluded that 

1. Google does not qualify for Safe Harbour protection because; 
2. It played an active role in providing its Google Ads program, and that
3. Google has a financial interest in higher bids on competitive trademarks. As a result, Google cannot rely on Safe Harbour protection for its sale of keywords. 

In reaching this conclusion, the Court explained that 

1. Google is not merely a passive conduit for the Google Ads service, and has been acting as an active service provider because it actively recommended trademarked terms to other companies; and
2. Google has a financial interest in selling Google Ads to companies willing to pay more per click than would-be competitors who bid lower on those same terms.

Critique

The Google v. DRS Logistics judgment is a robust piece of judicial reasoning that correctly modernises the interpretation of the Trade Marks Act.

• Recognition of Digital Realities: The Court’s refusal to accept the “invisibility” defence is commendable. In the algorithmic age, the value of a brand lies as much in its metadata as in its visual logo. By holding that backend use is still “use”, the Court has closed a loophole that allowed entities to free-ride on a competitor’s goodwill without consequence.
• Balancing Consumer Choice: The judgment avoids the trap of being over-protective. By ruling that keyword bidding is not automatic infringement, the Court preserves the competitive nature of the market. It acknowledges that a consumer searching for “Nike” might legitimately be interested in seeing an ad for “Adidas”, provided the ad does not trick them into thinking it is a Nike product. This aligns with international standards set by the European Court of Justice in Google France v. Louis Vuitton.
• Intermediary Accountability: The piercing of the “Safe Harbour” veil is the judgment’s boldest stroke. Big Tech platforms often hide behind section 79 to avoid liability for their monetisation strategies. This judgment clarifies that if a platform actively creates tools to monetise IP infringement, it cannot claim to be a neutral third party.

However, a potential criticism lies in the enforcement difficulty. While the law is clear, the burden of proving “confusion” still lies with the trademark owner. In the fast-paced world of digital ads, where ad copy changes daily, monitoring thousands of competitor ads for “confusion” remains a logistical nightmare for brand owners.

Impact

This judgment has immediate and far-reaching consequences for the Indian digital ecosystem:

1. Ad-Tech Policy Shifts: Google and other search engines may need to revise their keyword policies in India to ensure they are not actively encouraging infringement through their planning tools.
2. Strategic Shift for Advertisers: Marketers must now be extremely cautious. While they can still bid on rival keywords, the content of their ads must be distinct and non-misleading. Using a rival’s name in the ad text itself is now high-risk.
3. Rise in Litigation: We can expect a surge in suits against advertisers who use deceptive ad copy triggered by competitor keywords.
4. Intermediary Liability: This serves as a precedent for other platforms (like e-commerce sites) that use algorithms to recommend “similar products.” If their algorithms use trademarks to divert sales, they may face similar liability.

Conclusion

Google LLC v. DRS Logistics is a seminal judgment that updates the “grammar” of trademark law for the internet age. It establishes that the “use” of a trademark is not limited to what the eye can see, but extends to the code that directs consumer behaviour.

By holding Google accountable for its active role in selling keywords and affirming the rights of trademark owners to protect their digital identity, the Delhi High Court has fortified the IP regime in India. It sends a clear message: technology may change the method of commerce, but the fundamental principles of honesty in trade and protection of goodwill remain non-negotiable. For the legal fraternity, this case represents the new baseline for advising clients on digital marketing strategies and IP enforcement.

References

Case Law

1. Google LLC v. DRS Logistics (P) Ltd., 2023 SCC OnLine Del 4809 (Del. H.C. 2023).
2. Google France SARL v. Louis Vuitton Malletier SA, Joined Cases C-236/08, C-237/08 & C-238/08, 2010 E.C.R. I-2417 (E.C.J.).

Statutes

1. Information Technology Act, 2000, § 79, No. 21, Acts of Parliament, 2000 (India).
2. Trade Marks Act, 1999, §§ 2(2)(b), 29, No. 47, Acts of Parliament, 1999 (India).